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5 Areas for Auto Dealers to Consider Before Starting an In-House Leasing Program– August 09, 2016

Posted by Scott Adelson

Every successful business needs the ability to expand and grow alongside their customers. This may mean adding new services, products, and/or experiences to anticipate or meet clients’ needs. As an auto dealership, there are many options for growth, but one popular strategy is to start an in-house leasing program. Here are a few important considerations when making this big decision:

1. Analyze the market. Are there many other auto leasing companies nearby? If so, consider whether this venture would be worthwhile with the decreased margins that come along with competition.

2. Consider demographic demands. What does your customer base need? Fleet leasing or individual leases? Are your customers mainly small local mom and pops or are they growing corporations? Or does it make more sense to offer individual leases for customers’ personal use?

3. Consider your infrastructure. You must be able to maintain and manage numerous leases at once. That means having the right software and experienced employees in place.

4. Create a lease management plan. Once you have established the proper structure, the next step is to develop a lease management plan. There are many ways a dealership can manage lease plans, but if you went through the previous steps thoroughly, then you should already have a pretty good idea of what needs to be done to manage your leases successfully.

5. Know what you’re getting into. There are many reasons why offering an in-house lease program can be a good move for a dealership, but it can also come with its own mix of complications. Be aware and ready to take on issues such as lessees defaulting on their lease(s), wreckage of leased vehicles, keeping up insurance and registration on vehicles, and varying residual rates.

There are many issues to consider before starting an in-house leasing program; but, if done correctly, it can be a great next step to help keep current customers, gain new ones and grow your bottom line. If you decide it’s worth it, then start planning and selling!

We want to hear from you! We encourage you to comment below on this blog post, share it on social media or contact Scott Adelson at sadelson@cohencpa.com or a member of your service team for further discussion.

Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.